WHAT? I am sending this ...
Subject: NASD Release No. 34-44732; File No. SR-NASD-2001-44
I would like to offer my comments on the PROPOSED RULE CHANGES of the SEC News Digest Issue 2001-165 dated August 24, 2001where it states: The National Association of Securities Dealers, through its subsidiary, The Nasdaq Stock Market, Inc., has filed a proposed rule change (SR-NASD- 2001-44) to allow automated trading systems (ATSs) and electronic communications networks (ECNs) to participate on the OTC Bulletin Board. (Rel. 34-44732) The Philadelphia Stock Exchange filed a proposed rule change and Amendment No. 1 thereto (SR-Phlx-99-52) to adopt Rule 51, enforcement of capital funding fee. Publication of the notice is expected in the Federal Register during the week of August 27. (Rel. 34-44733) The National Securities Clearing Corporation filed a proposed rule change (SR-NSCC-2001-07) that would allow. NSCC to (i) further automate the buy-in process of CNS positions, (ii) allow for Buy-In Notices to be filed on successive days provided that the quantity of securities representing the sum of the Notices does not exceed the member's total long position, and (iii) revise Retransmittal Notices to include the identity of the Buy-In originator. Publication of the proposal is expected the Federal Register during the week of August 27. (Rel. 34- 44736)
This is a very solid change that will assist the small investor in leveling the playing field. As you are aware, the OTCBB markets are fraught with Pump & Dump schemes but even worse is the other side of the coin, the Shorting & Distort scheme. To date the regulators have not addressed the Short & Distort scheme or the market influence on line that do exactly the opposite as the Pump & Dump. However, the SEC has and continues to go after the Pump & Dump schemes while ignoring Short & Distort. Because the Short & Distort operators realize they are not under scrutiny, they can control the market with no fear of regulatory consequences.
S&D bias with no checks and balances adversely affects the supply and demand of the trading of a security, especially since OTCBBs which are not supposed to be able to be shorted until they are marginable. The implementation of ECN & ATS as market makers will greatly assist in taking out the controlling factor that shorts in the OTCBB have because currently the shorting is not regulated.
The Market Makers for some reason have a tendency to spread out the security with massive gaps when a short call is made by one of the shorting gurus to its followers, this effectively kills any buying interest that comes into play. The Shorter's force a false downward movement to simulate a “Bear Raid”, then to support this false pressure the bashers (opposite of pumpers) begin their public campaign of lies and twist information to support the negative downside pressure. When you further consider the MMs spreading out the bid ask it is almost like stealing candy from a baby. But this is not candy it is hard earned money of long investors.
The MMs assist in killing the interest and forcing capitulation in order to cover. This new regulation will make it more difficult for this helping hand to aid in a Short and Distort. It will also stop the locking can boxing the MMs do to kill the trading. This hurts the company severely and investor confidence is destroyed. It is almost as if the MMs and the shorts are in league together to steal money from small long-term investor who are not day traders or shorters.
ECN & ATS will allow the small investor to get better execution and thus take out the control of the MMs and their large spreads to kill the liquidity in the trading of the stock. Short & Distort's will have to put out a greater number of lies to keep the interest killed and try to kill the company and long–term investor’s interest. ECN & ATS will improve the liquidity of the trading because it will not have an agenda to move the stock up or down but allow it to trade regardless of the short position and the distorting.
ECN will improve long-term investor’s confidence because the market has been allowed to move from an investment vessel to a day trading vessel. At least the long-term investor will have an alternative to the no fills, large spreads and liquidity problems of a security they currently face.
This rule is a wonderful proposal for the small investor.
Gary Swancey
Coral Springs Florida |
